If there's an intelligent argument why oil will stay at $40 into
the hereafter when production is relatively steady and
consumption is rising, we'll be happy to evaluate it. But
we haven't heard it yet.

So what can we do about future skyrocketing prices? No
mystery: Conserve fossil fuels and develop renewable energy
technologies.

Aside from a handful of rich people, though, no one's ever going
to use renewable energy technology until it costs less. And
as long as the global economy and fossil fuel prices collapse
every time fossil fuel prices spike, it's going to be a long time
before renewable technologies will be consistently cheaper.

So what can we do about that? Make sure fossil fuel prices
stay consistently expensive.

How?

With, among other things, a gas tax.

Not a flat-rate gas tax. A floating-rate one...that would
adjust to the price of oil (and help minimize price spikes).

And not now, because it would be another hammer blow to the
economy. In a few years, so people and industries have
enough time to adjust.

For example, the US could peg gas prices at a minimum of $5 a
gallon after 2014 by phasing in a tax starting in 2012.
Whatever gas would cost on the open market (benchmarked to the
price of oil), the tax would make up the difference between that
and $5. If the market price for gas went over $5, the tax
would disappear.

Yes, free-market folks will scream. Yes, the oil industry
will scream. Yes, folks who love Hummers will scream.
But we'll be better off in the end. Folks who want to drive
Hummers will still be able to. Our deficit will be slightly
less horrific (new tax stream). And everyone will be
incented to buy technologies that are better for everyone,
helping to launch dozens of new industries in the process.

Tom Friedman has produced a good first draft of the speech Obama
should give to sell this plan...

“My fellow Americans, I want to speak to you about a new economic
law. You’ve heard of Moore’s Law in information technology. I’d
like to speak to you about the ‘Law of More’ in energy
technology. Americans, Indians, Chinese, Africans, we all want
more — more comfort in our homes, more mobility in our lives,
more technologies with which to innovate. But there is only one
way all 6.3 billion of us can have more and not make this an
unlivable planet, and that is by living our lives and running our
businesses in more sustainable ways and properly accounting for
it. Read
the whole thing >